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Canada’s Competition Tribunal will soon release a ruling on a case against Visa and MasterCard, started in 2010.

The credit card companies prevent retailers from refusing to accept “premium” credit cards that offer reward miles, points and other benefits for consumers, but for which merchants pay higher processing fees.

Some retailers, such as Sam James in Toronto, have switched to a cash-only format to avoid paying high credit card fees that hurt their profits.

If the tribunal sides with retailers that want to pass on credit card fees directly to customers, Canadians could be hit with big surcharges on purchases, warns the Consumers’ Association of Canada.

Here is a guest post by Angie Picardo, a staff writer with Nerd Wallet, about how surcharge fees may be coming to Canada.

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There are three rules that both Visa and MasterCard enforce for retailers opting to accept their cards for payment.

1. Retailers must accept all cards

If a company opts to accept either MasterCard or Visa, they cannot differentiate between the types of card accepted. For example, retailers cannot specify that they will accept a MasterCard SmartLine Platinum but refuse a National Bank Allure MasterCard.

2. Retailers cannot discriminate

If a customer opts to use a credit card with a higher card acceptance fee, that card must still be accepted as a suitable means of payment and the customer cannot be treated differently for deciding to choose that specific card.

3. Retailers cannot require a surcharge

Retailers are not allowed to independently require additional surcharges to customers who pay with Visa or MasterCard.

What’s the problem with that?

The driving force in the case against Visa and MasterCard is that they hold a near monopoly over credit cards in Canada, as both companies together comprise about 92 per cent of the market.

As Visa and MasterCard release “premium” credit cards, most of the cost is subsidized by merchants. The Competition Bureau estimates that high transaction costs result in businesses paying for about $5 billion in hidden fees annually.

Canada is not the first country to tackle credit card transaction costs and surcharging.

In the United States, Visa and MasterCard faced similar charges and opted to settle out of court in July 2012, allowing retailers to offer surcharges.

It’s predicted that few businesses will impose surcharges, since they have integrated transaction costs into their prices. Also, they’re worried about scaring off customers with increased fees.

In Australia, credit card surcharges were allowed in 2003. Several businesses took advantage and started implementing unreasonable surcharges to compensate for transaction costs.

Responding to an outcry from consumers, the Reserve Bank in Australia is giving power back to credit card companies and allowing Visa and MasterCard to put limits on acceptable surcharge rates.

Although hearings for the Canadian case against Visa and MasterCard have ended, a formal decision has yet to be issued and a report is still in the works.

Recently, Visa increased its transaction rates to merchants by one third and issued a new “ultra premium” card, which comes with higher fees for businesses than the premium cards already on the market in Canada.

MasterCard followed Visa, increasing transaction costs to merchants by 20 per cent.

Consumers, merchants and credit card companies are waiting for the Competition Tribunal’s ruling to decide on their next play.

Angie Picardo is a staff writer for NerdWallet, a personal finance website that helps consumers save money and make smarter decisions about their personal finances, travel plans, or higher education.